Apparently, the Dems are hanging their hats on this bit of the S&P report. this is what the other guy in the video clip is talking about when he says S&P said it's about Republicans and "raising revenues".
Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act…I wonder who works at S&P and what their agenda is? Because if you ask me, this sounds like Democrats talking. And here's why I say this. To Democrats:
With them, its that reflexive.
Now .... "taxes" haven't gone down in any meaningful way during this recession. But revenues have. Given the above, that's counterintuitive. What gives?
Govt Revenue = f(Tax Rate,Private Sector Revenue)
In general, it is a product. However, even Obama admitted during the debates that there is a negative feedback factor as your tax rate goes up. But in the same breath he said he doesn't care if it means sticking it to the guys he thinks it should be stuck to.
When the economy tanks, private sector revenue goes down, ergo government revenue goes down. When the tax rate goes up, private sector revenue goes down, so the net change isn't necessarily positive. But holding the tax rate the same, and increasing Private Sector Revenue (which can only be achieved by economic growth), you get more government revenue, and it has further been shown that if taxes have been raised too high, lowering them some will result in more economic growth -- and that has been shown in the past to yield more government revenue ... at a lower tax rate.
Democrats are always willing to see that raising taxes can theoretically, if people do not change their economic behavior in response, raise revenues. They refuse to see that it often does not.
Combine that with the fact that we have one of the highest corporate tax rates on the planet, and take a wild guess what is likely to happen if we raise them even more?
Republicans know that theoretically if you raise taxes and if people do not change their economic behavior in response, you might raise revenues. They also know that people not responding by changing their economic behavior is about as likely as a snowball passing intact through a jet engine. They can also show that you can lower taxes and still raise revenues. And they also know that our Republican government was founded on the ideal of limited government, and that bigger, more expensive, more oppressive (taxing) government is antithetical to that ideal.
Our credit rating should have been downgraded over a year ago, maybe longer ago. It wasn't. What the Tea Party is saying is that we know that if we give you more, you will spend it and more. And the Republicans held the "ceiling deadline" as a bargaining chip no more than the Democrats did. Hell, Boehner had a plan out there on the table that included $800 billion in "revenue increases" a week or so before the deadline. That sounds like compromise to me. But what happened?
President "Almost God" demanded another $400 billion.
And Boehner rightly said "you and the horse you rode in on, bub!"
Democrats always want more, and they'll call it anything in the world to get it. And if you don't give it to them, you're the one who didn't compromise.
If it means Congress will start taking the debt seriously from now on, I am glad we were downgraded, because absent that, our real credit risk, no matter what company said what about it, would continue to slide off the cliff.